The milk split by the milk war

Belarus had been through numerous economic wars with Russia before, but once the Kremlin sent its Chief Health Inspectorate into battle, it became clear that the stakes would higher than ever. Moscow, it seems, wants the head of Belarusian President Alyaksandr Lukashenka and will do whatever it can to prevent Belarus turning westward.

The Belarus-Russia ‘milk war’, which lasted for over a week in early June, began in the most unusual manner. In the past, the reason for conflicts was Kremlin’s refusal to satisfy Lukashenka’s insatiable appetite for loans or economic subsidies. This time, though, it was Russian Prime Minister Vladimir Putin who visited Minsk on 28 May and offered a stabilisation loan worth $500 million (€356m), with just one string attached – that the loan be delivered in Russian roubles. Minsk took this as a sign that Russia wanted to cement Belarus’s economic dependence on Moscow and did what had been unheard of: it refused to take money.

Russian officials were furious. Putin’s deputy, Alexey Kudrin, declared that Belarus might be insolvent by the end of the year, and that independence could be too much of a burden for Russia’s brother-country. At that point, the International Monetary Fund stepped in, almost on the spot adding €1 billion to the stabilisation loan that it had approved for Belarus before the New Year.

That Belarus is now the object of geopolitical competition had become undeniable.

Nor was that the only slight for Russia. During Putin’s visit, Russia also expressed interest in the privatisation of some of Belarus’s major milk producers. The Belarusian government’s response was almost immediately to begin talks with the EU on certification of Belarusian milk standards according to EU norms.

Russia’s response was to send along its health inspectors, headed by the notorious Gennady Onishchenko, a man responsible in the past for banning Polish meat, Moldovan wine, Latvian canned fish and Georgian mineral water. True to form, Onishchenko advised Moscow to ban all imports of Belarusian dairy products, saying they lacked properly certification, and Russian broadcasters appeared on air claiming that Belarusian dairy products could be hazardous for health.

A curious observer might wonder why Russia had tolerated such a hazard for so long and whether the same health inspectors should therefore be prosecuted for endangering the health of Russians. But, when a compromise deal was achieved on 15 June, no one really remembered concerns such as certification and health. Moscow seemed to be satisfied when Belarus agreed to significantly reduce its dairy exports to Russia (per capita, Belarus produces three times more milk than Russia does, and half of its dairy products are exported to Russia).

This may not be the last product war. Already, Russia has begun a de facto embargo on the sale of fish processed in Belarus, and in the Russian media there is already talk of a new ‘gas war’ to follow the four-day war in January 2007. Gazprom has already found a debt of some $200 million that Belarus must now pay almost on the spot.

In the Kremlin’s eyes, Belarus’ turn to the West confirms that Lukashenka is willing to drop or exchange his geopolitical loyalties at any moment that suits him

Wanted: Lukashenka’s head

Moscow has not hidden that it wants Lukashenka removed: sources in the Russian government leaked opinions to the media that Lukashenka might have ‘spent too much time’ in the presidential chair.

Lukashenka’s response to that challenge has been to cross lines he has never crossed before. He has ordered the re-establishment of border controls with Russia, a move that is of even deeper political and symbolic importance because he began his presidency (back in 1994) by tearing down border posts with Russia. Lukashenka also boycotted last week’s meeting of the Collective Security Treaty Organisation, which groups together members of the Commonwealth of Independent States, on the grounds that Russia was undermining the security of the Belarusian state – a step all the more potent because Belarus currently holds the chairmanship of the organisation.

Lukashenka knows what he is doing. The prospect of controls on Belarus’s border and the lurking fear that Lukashenka might one day embrace NATO and bring the alliance within 300 kilometres of Moscow has in the past been a nightmare powerful enough for the Kremlin to accept Lukashenka’s caprices. Lukashenka has also reached out to the West. In the midst of the milk war, a delegation from Germany’s ministry of economy visited Belarus and declared that Germany would assist Belarusian companies to gain European loans and adopt European standards to boost their exports to the West. And this Monday (22 June) Benita Ferrero-Waldner, the EU’s commissioner for external relations, visited Minsk at Lukashenka’s personal invitation. Just three months ago, Lukashenka snubbed her with an abrupt departure for Yerevan on the day she was to arrive to Minsk.

So, why Russia is after Lukashenka now? The obvious answers are the Eastern Partnership that the EU created in May with six post-Soviet states and Lukashenka’s refusal to recognise the independence of Abkhazia and South Ossetia. In the Kremlin’s eyes, Belarus’ turn to the West confirms that Lukashenka is willing to drop or exchange his geopolitical loyalties at any moment that suits him.

As for Lukashenka, he is preoccupied with his own destiny. The war in Georgia last summer showed him that he cannot trust Russia to help his political survival, and, vice versa, that complete dependence upon Kremlin will sooner or later end his political life. Imagine, for example, what would happen if he were to recognise Abkhazia and South Ossetia: they would immediately apply for membership of the currently weak and amorphous Russia-Belarus union, and Russia’s three-member bloc would establish an institutional frame that would swallow up Belarus.

Lukashenka’s conflict with Moscow is therefore based on an unresolved antagonism. Lukashenka has not proved to be what Moscow wanted him to be, an isolated strongman with no option but to surrender his country to Russia. Instead, he has turned into stumbling block to Moscow’s wish to solidify control over Belarus. As for Lukashenka, he is now in a position where he cannot make concessions that would deepen economic, military, and monetary integration with Russia because to do so would be to make his position vulnerable.

The path to political survival

So Lukashenka is running from Moscow to Europe for his political life. But what might he do? He may survive for a time being on competitive bidding from alternative geopolitical sponsors. And Lukashenka has something to keep Russia dependent upon him – Belarus as a key transit country for Russia’s energy pipelines. But when Russia completes the BTS-2 oil pipeline to the Baltic region, which it began on 10 June and should finish in 2012, this last clear advantage will disappear because Russia will be able to bypass Belarus. Lukashenka therefore has two or three years in which to establish the viability of Belarus’s economy, re-orientate its trade, bring in investments and sharpen the competitiveness of the country’s decrepit industrial sector. He needs to embark on economic modernisation and reform, which could come with unprecedented political and social costs.

More than that, though, he needs to establish a new sense of legitimacy. Belarus, once marketed as an outpost of Soviet pride, an island of stability, and a ‘better place for Russians to live than Russia’, has to be redefined as a country and a nation that not only can, but should, survive outside the embrace of the Big Brother. Lukashenka needs to explain to Belarusians why they have new enemies and new friends, why a country that once took pride in not following the civilised world is now surrendering to the ‘world government’, a phrase he has used to refer to the EU, the EU, NATO and the IMF. Will he do that?

He probably will, if he is confident that this is the only way to ensure his political survival and personal safety. And, if Belarus embarks on this forced change and modernisation, there is no one other than the EU that could be the primary external partner underwriting such a change. The EU, once hapless when faced with Lukashenka’s transgressions, all of a sudden has clout and leverage over Lukashenka.

It should use this leverage wisely and in a graduated manner. Political conditionality has to be applied carefully and not overstated in these first stages of engagement, but it has to be clear to Lukashenka that any help from Europe is conditioned by a complete and irreversible cessation of political repression. Economic assistance has to be conditioned by real market reforms, including in those areas where reforms are most painful. And the EU has to be prepared to share its experience and expertise in those areas that matter most to Belarus, such as the transformation of small industrial towns burdened by gigantic Soviet-style conglomerates.

Such assistance cannot, of course, come with no strings attached. Engagement cannot involve the bail-out of a tyranny. But the policy options for Europe are no longer restricted to the choice between German-style realpolitik and excessive and hard-line conditionality. Germans may be right that ‘change through inclusion’ may be better now – but the unavoidable reality is that re-orientation of Belarus to the West will require a measure of integration, including the adoption of political standards.

The real way out is therefore to hold a dialogue over the form, time frame and guarantees of political transformation that will ensure that Belarus can be integrated into Europe. The EU could, for example, offer a grand plan of negotiated political change and gradual economic transformation in the context of European integration. The time is about right to make such an offer.

But surely Lukashenka leading Belarus into Europe sounds too bizarre to be a realistic prospect? Ten years ago it was equally bizarre to think that he would ever build a border with Russia and become chummy with the IMF.

Vitali Silitski is the head of the Vilnius-based Belarusian Institute of Strategic Studies.